Health Insurance and You!

During the past year, we’ve posted several times on the progress that states and the federal government are making in setting rules for, building, and starting to market the online health insurance exchanges that were a hallmark of the health reform law. The exchanges, which will open for enrollment in October, are generally seen as a good new resource for individuals and families who lack access to employer-sponsored coverage, and states have been working quickly to get them up and running in time.

Given this progress, it may be easy to forget that in addition to individuals and families, small businesses are another target group for the exchanges. The Small Business Health Options Program (SHOP), also established through the 2010 health law, was created to give workers at small businesses a choice of health insurance plans. Like the individual market exchanges, SHOP will allow consumers to directly compare plans and prices, as well as aggregate and simplify enrollment and payment, according to a fact sheet on the program from Healthcare.gov. Premiums for SHOP plans will vary only by age and smoking status, and won’t be affected by the size of the business. States have the option of keeping the individual and small business exchanges separate or merging them into one program.

SHOP exchanges were originally scheduled to open next January, but, writes Robert Pear in an article for the New York Times, federal officials have decided to postpone its launch by one year. Citing operational challenges as a reason for the delay, states will have to give small business employees only one choice of plan in 2014, with broader options available in 2015.

Drew Armstrong, in a piece for Bloomberg, explains that the delay applies only to the states using the federal exchange, not those running their own exchange. While the federal requirement to provide choices has been delayed, many states with state-run exchanges are planning to provide them anyway, according to an article by Kelly Kennedy of USA Today.

Small business associations and advocates largely criticized the delay, explaining that small business plans were a major selling point of the health law to them. Health coverage is a big expense for small businesses, which have fewer employees among whom to divide the risk. Having a choice between several plans would push down premiums through competition and allow employees to get exactly the coverage they want, added a small business owner quoted in Mr. Pear’s article.

Health insurance companies, however, cited the challenges that Massachusetts experienced in setting up an exchange for employees that provided choices. Given that the Department of Health and Human Services (HHS) did not release detailed guidelines on SHOP exchanges until last month, states may not have enough time to use that guidance and launch by next year.

Readers, do you or your loved ones work in a small business? If so, are you planning to get coverage through a SHOP exchange next year or sometime in the future?

As health reform moves toward full implementation – with online health insurance exchanges opening for enrollment in October and an expansion to Medicaid eligibility coming soon to several states – there is a growing push by insurance companies and states to reach new consumers and get them enrolled. States are trying a variety of strategies to reach these emerging markets and facing some challenges along the way.

In Los Angeles County, for example, writes Anna Gorman of the Los Angeles Times, the county’s health care system has teamed up with the nonprofit organization OneLA to reach potential consumers where they already are. This strategy includes holding insurance enrollment events at places like churches, schools, and community groups. According to Ms. Gorman, much of the effort is coming from trained volunteers, who are making the enrollment process more efficient by identifying potential consumers through religious organizations and pre-screening them for enrollment in either Medi-Cal or Healthy Way LA, a temporary program for those who are not yet eligible for Medicaid but will be under the expansion. Volunteers are also helping to connect patients to clinics near their homes.

Elsewhere in California, writes Leslie Griffy of the California Health Report, officials are working to build a network of nonprofits and businesses that can work together to market the new insurance options to potential consumers. They’re still working on strategies for how best to reach consumers through events and local media, but hope that the more informed consumers are by enrollment time, the more likely they will be to put in the effort to find the right plan for them and enroll.

In Connecticut, outreach and marketing efforts for the state’s health insurance exchange are going full steam ahead, according to an article by Phil Galewitz of Kaiser Health News. Ads for TV, newspapers, and billboards are in the works. Officials also plan to work with providers to identify potential consumers – people who are currently uninsured – when they seek care at community health centers and other clinics, as well as through community groups and local businesses. As the weather warms and outdoor events become more common, the state also plans to have booths at festivals and street fairs. Small businesses, whose employees will soon have access to small-business plans, are yet another target for insurers and the state.

But there are challenges. Studies show that people without health insurance are less likely to seek health care, which makes it harder to find them and encourage them to enroll through the traditional medical system. Depending on income level and eligibility for subsidies, health coverage may be a hard sell for potential consumers who find insurance too expensive. And language barriers are another challenge – one that hits at multiple points in the enrollment process, explains Donna Gordon Blankinship in an article for the Associated Press. Not only are ads and other marketing efforts in English less accessible to non-English-speakers, but even the enrollment process and the medical system in general are harder to navigate. Washington’s exchange staff are working with local groups to address this issue.

Readers, have you noticed any health insurance exchange or Medicaid outreach efforts in your state? If so, what have you seen?

As part of health reform, states were given until February 15 of this year to decide whether to build their own online health insurance exchange, join the federal one, or work with the Department of Health and Human Services (HHS) to establish a joint exchange. Along with their decision, states that decided to build their own exchange had to submit a plan for its implementation and get conditional approval from HHS on that plan. Once that decision was made, most states passed state-level legislation to formally establish the exchanges and settle some basic details.

As of this month, 17 states and the District of Columbia have received HHS approval for a state-based exchange and 26 states plan to use the federal exchange, according to an issue brief published this month by the Kaiser Family Foundation (KFF). The remaining 7 states intend to run a joint exchange for 2014, with at least one of those states, Illinois, planning to transition to a state-based system in the near future. (For more on your state’s plans and progress so far, check out KFF’s collection of up-to-date state exchange profiles.) Whatever the mechanism, writes David Morgan in an article for Reuters, everyone will have access to health insurance through an exchange by January 2014, with enrollment opening this October.

Once states choose what type of exchange they want to build, they have several decisions to make. As we get closer to the launch of exchanges this fall, states are moving quickly to address questions about the funding, governance, and day-to-day operations of exchanges. The systems they have come up with vary widely.

Funding. All but four states have received and accepted some federal assistance to study, plan, and establish the infrastructure necessary for exchanges. According to the KFF brief, states have until the end of 2014 to receive and use these funds, which are intended for the initial implementation of exchanges, not their daily functioning. Daily exchange operations must be covered by the states. Last week, officials in Colorado decided to pay for these costs by adding a 1.4% fee to the cost of plans sold via the exchange, according to an article by Eric Whitney of Colorado Public Radio. Other states are looking into similar approaches.

Governance. Most state exchanges will be governed by a nine- to 15-member board, either run directly by the state or working closely with it. According to the KFF brief, Hawaii is an exception; its health insurance exchange will be run as a non-profit organization.

Benefits. As we’ve blogged previously, state definitions of essential health benefits vary quite a bit, in large part responding to the culture, geographical challenges, and health priorities of their residents. HHS provided some guidance on the benefits that must be covered by plans sold on exchanges, by defining ten broad categories of essential benefits, but left the details up to the states. In Colorado, for example, writes Michael Booth of the Denver Post, plans covering children’s dental care – an essential but optional benefit according to the HHS guidelines – will be offered via the exchange, but parents will not be required to purchase them.

Enrollment and Outreach. With the exchanges’ debut just months away, states are scrambling to set up ways to educate their residents about the exchanges and the plans available through them, and make sure they can access all the information they need. Last week, Georgia lawmakers passed a bill that would require health insurance navigators – professionals who will help businesses and uninsured individuals use exchanges to select and enroll in a plan – to be licensed and regulated. According to an article by Misty Williams of the Atlanta Journal-Constitution, the bill passed the state Senate with a vote of 136-24 and is now headed to the governor’s office for his approval.

Exchange planners in California are also considering the roles of these new health care jobs that have cropped up as exchanges get going. Patient privacy advocates and other stakeholders are debating the level of access these workers should have to confidential health information and how much screening they should undergo in order to be granted that access, reports Chad Terhune of the Los Angeles Times.

Market research and outreach is another priority. According to an Associated Press article, a recent online survey of New Hampshire residents found that they are worried about getting covered through exchanges and, by and large,  don’t know where to go to get their questions answered. In general, survey respondents supported standardizing benefits and forms as much as possible in order to minimize confusion.

All in all, while states have a lot to decide and set up by the time exchanges launch in October, they are moving at a rapid clip to get ready in time. Readers, have you been keeping up with health insurance exchange progress in your state?

Yesterday, global marketing research company J.D. Power and Associates published the results of its 2013 Member Health Plan survey, which measures consumers’ satisfaction with their health insurance plans across the United States. According to the company’s press release on the survey results:

• Overall satisfaction has not changed much, decreasing very slightly from 702 out of 1,000 in 2012 to 701 in 2013.
• 59% of survey respondents had only one choice of health insurance plan when enrolling.
• 51% of respondents reported an increase in their premiums during the past year.

The survey noted a growing interest in enrolling in coverage through online health insurance exchanges, a key part of the 2010 health reform law. Overall, 43% of survey respondents were interested in using a state exchange, though that number varied widely between different groups of participants. Among people in the individual health insurance market, for example, 73% “probably” or “definitely” plan to shop for coverage via exchanges when they debut in October. Among people with employer-sponsored coverage, those working at small companies were most interested in exchanges (53%), followed by employees of medium-sized (48%) and large (43%) companies. According to an article by Dennis Domrzalski of Albuquerque Business First, people with more choices of employer-sponsored coverage were less interested in exchanges, with 50% of those with only one choice of plan expressing interest, compared with 36% of those with two or more choices.

Interest in exchanges also varied among people with different types of coverage. Health insurance exchanges were more popular among consumers currently enrolled in a high-deductible health plan, of whom 59% reported interest in the new systems, than those in more traditional, low-deductible plans, of whom 45% were interested. This could be because high-deductible plan members, who are more immediately affected by the prices of treatment, are more aware of what their coverage buys them and more inclined to find ways to control their health expenses, the J.D. Power analysts explain.

The results were based on a survey of more than 33,000 members of 136 health plans in 17 regions across the United States.

Readers, do you plan to try out the health insurance exchanges later this year and in 2014? Why or why not?

When trying to get someone to do something, such as losing weight or dropping an unhealthy habit, leaders have a choice in how forceful they want to be. This month, researchers at Harvard published a study on people’s responses to gentle approaches to encouraging healthy behavior vs. more coercive methods. They found that survey respondents were more supportive of gentler approaches, such as labeling menus with calorie counts or making nicotine patches and other quit-smoking aids easier to access, than of strategies that punished unhealthy behaviors, such as higher health insurance premiums for the overweight or outlawing smoking in homes and other private places.

In other words, they preferred policies that made it easier to adopt healthy habits but wanted to retain the final choice of whether to do so. In general, between 70% and 90% of survey respondents supported policies to make fruits and vegetables more affordable, and physical education and health classes to encourage exercise in public schools. But when the policies took on a more punitive tone, support went down to less than 40%.

An important caveat: The study addresses which approaches consumers prefer, but not necessarily which ones are most effective. It’s likely that whether a particular approach works or not varies between people and cultures, and takes into account a variety of other factors, such as their current health status, financial situation and other priorities, personal likes and dislikes, and intrinsic motivation to improve their health. For example, a person who plays with an intramural sports league in their free time would be more likely to join a company-based softball team than someone who has more fun reading, watching TV, or enjoying other less physical activities. Similarly, a person who has lost a relative or close friend to cancer caused by smoking cigarettes would have added motivation to quit smoking – or never pick up the habit – than someone who hasn’t experienced this loss.

Readers, how would you like to be steered toward healthier behaviors? Which approach do you think would make you adopt those behaviors and why?

For more on this topic, see:

• Sept. 20, 2012: Health Insurer Rewards Customers for Healthy Grocery Shopping
• April 9, 2012: TREND: Health Insurers Use Group Games to Encourage Wellness
• Oct. 31, 2011: Stronger Incentives: Charging Unhealthy Employees More for Premiums
• April 13, 2011: Medicaid to Add Incentives for Keeping Good Health

As we’ve blogged about a couple of times (November 2011, April 2012), the Affordable Care Act (ACA) gave the Department of Health and Human Services (HHS) the authority to review proposed health insurance premium increases higher than 10%, along with the insurer’s justification for the increases, and decide whether or not they were reasonable. Many found this authority to be lacking teeth, since HHS was not able to block or otherwise do anything about increases found to be unreasonable. Over the past year or two, however, proposed premium hikes have been reduced (though not cancelled) after being deemed unreasonable, suggesting that the review process does have at least some effect.

Now, according to a new rule announced last week, HHS will require health insurance companies to report all proposed rate increases for individual and small business plans – not just those of 10% or more. According to an article by Robert Pear of the New York Times, HHS needs the data in order to monitor changes and predict disruptions to the health insurance market as the ACA takes full effect in January 2014. Insurers, however,  worry about the added administrative burden and possible redundancy of reporting and justifying all rate increases to both state and federal officials.

Another rule released late last week addresses multi-state health insurance plans, writes Timothy Jost in a blog post for the journal Health Affairs. The multi-state plan program (MSPP) was created by the ACA to make sure consumers in every state have choices between at least two health plans and can benefit from market competition between those plans. As we mentioned in a blog post last October, at least one of these plans must be run by a nonprofit organization. Any additional plan(s) will be managed by the U.S. Office of Personnel Management (OPM), the agency that currently manages health insurance options for federal employees. MSPP insurers must offer at least one plan at the gold level of coverage and one at the (slightly less comprehensive) silver level.

The new rule states that multi-state plans must meet the essential benefit requirements of all states that they are sold in. If an exception to this rule is warranted, multi-state plans will have to cover OPM’s set of essential health benefits at the federal level. In these situations, OPM will work with the states involved to ensure that MSPP plans are on an even competitive playing field with the other health plans sold in those states.

Given that 2014 is less than a year away, MSPP plans won’t be available in every state by next January, but they will be available in at least 60% of the states by then and in all states within four years. Critics of this “phased-in” approach worry that insurers will gravitate toward the states that may already have enough competition between health plans, and that states with fewer options won’t be adequately served until later, Mr. Jost explains.

For more information on the MSPP regulations, see:

• March 1, 2013, Wall Street Journal: Obama Clarifies Part of Health Law

If you were enrolled in a comprehensive health insurance plan with low co-payments and deductibles, would you go to the doctor more often? And if you expect to seek healthcare more often, would that affect your choice of health plan? These are the questions posed in a recent study by economists at the Massachusetts Institute of Technology (MIT), published this month in the journal American Economic Review.

Previous studies of consumer behavior have looked at related questions, such as whether people with insurance get needed emergency room care more often than the uninsured do, which we blogged about last spring. (The answer, as you may expect, is yes.) In general, such research has found a correlation between being insured and getting more health care.

The correlation makes sense. If you have insurance, you’d have no qualms about using it for needed care; that’s what it’s for. But what about care that isn’t strictly necessary? In a press release for MIT, Peter Dizikes addresses the concept of “moral hazard”, the idea that people with insurance change their behavior because they know they don’t have to pay for it – or at least not as much. When it comes to health insurance, he explains, it’s pretty much a given that people with coverage get more care.

The MIT study builds upon those findings by considering how consumers become enrolled in a comprehensive health plan in the first place – what makes people choose that plan? One result was fairly intuitive and not that new: people in worse health tended to choose more comprehensive plans. But their second big finding was surprising: people who thought that being insured would increase their use of healthcare also tended to choose comprehensive plans. In fact, the economists found, expecting to visit the doctor more often was just as important as overall health in people’s choices of coverage.

What the two groups had in common was their expectation of using healthcare, whether the reason was needing to (because of poor health) or simply being able to (because of being insured). Readers, when shopping for and enrolling in health insurance, how have your expectations of using healthcare affected your decisions?

Last year, the Department of Health and Human Services (HHS) released a list of ten broad categories of ‘essential’ health benefits: types of treatments and services that all new health insurance plans would be required to cover. Among the essential categories were emergency care, hospitalization, maternity and newborn care, dental and vision care for children, and preventive care. The overall goal was to ensure that all plans covered a certain baseline level of treatment and to allow consumers to more accurately compare the costs and benefits of a particular plan.

Though HHS did provide this general guidance, it stopped short of specifying exactly which benefits fell into each category, opting instead to leave that decision up to the states. In order to be sold on a state’s health insurance exchange, individual and small business market plans would have to cover all of that state’s essential benefits.

Hoping to disrupt the market as little as possible, many states decided to designate a plan popular in the state as a benchmark plan, requiring other plans to cover all treatments and services that the benchmark covered. This has resulted in wide variation between states’ definitions of essential benefits. For example, coverage for autism treatment, acupuncture, and bariatric surgery differs between the states.

On Wednesday, HHS released its final rule on essential health benefits. In general, writes David Morgan in an article for Reuters, the rule had no major changes from previous iterations, and states would continue to be the main regulators of the health insurance market. Insurance companies repeated their warning to consumers that making coverage more comprehensive would drive up premiums. Mr. Morgan quotes one insurance executive who considers plans to be sold via the exchanges as a new category of coverage that is more comprehensive than plans on the market today – likely with prices to match. With the varied coverage requirements involved, not all insurance companies plan to participate in all state exchanges.

Notably, the new rule does require plans sold on exchanges to cover mental health and substance abuse treatment, writes Robert Pear in an article for the New York Times. According to federal officials, the rule will allow 32 million people access to mental health care and improve the care available to 30 million more. Currently, almost 1 in 5 people with individual health insurance do not have coverage for mental health treatment and almost 1 in 3 lack coverage for substance abuse treatment.

In addition to defining essential benefits for plans sold on the exchange, the final rule also sets levels of coverage, prevents discrimination based on age or preexisting health conditions, and elaborates on prescription drug coverage, according to an article by Kelly Kennedy of USA Today. It also clarified questions of how and when procedures could be coded and classified, with the goal of reducing surprise medical bills. These provisions and others came from more than 11,000 comments that HHS received from the public and various stakeholders on the draft version of the rule, which was published in November.

Previous coverage of this topic on our blog:

• Oct. 1, 2012: States Begin Defining Essential Health Benefits for Exchanges
• Sept. 4, 2012: California Considers Essential Health Benefits, Insurance Premiums for Smokers
• Oct. 11, 2011: IOM and HHS Work to Define What Health Benefits are Essentia

As the rules and regulations surrounding essential health benefits and employer-sponsored health insurance continue to evolve, a growing number of companies are finding self-insurance to be an attractive alternative. Companies that self-insure directly take on the risk for (and pay for) their employees’ health care, rather than working with health insurers to do so. In some cases, employers can buy insurance to protect themselves at the company level from the risk of very large, unexpected medical bills.

Generally, self-insurance has been popular among larger companies that may cross state lines, but the 2010 health reform law, hoping not to rock the boat for self-insurance plans that are already working successfully, allows companies that self-insure to opt out of many of the law’s new requirements. This makes it potentially appealing for smaller firms as well, explains Robert Pear in an article for the New York Times.

In fact, the percentage of people enrolled in a company’s self-insurance plan has increased during the past decade or so. According to an analysis by the Employee Benefit Research Institute (EBRI) released late last year, 40.9% of private-sector workers with health insurance were in self-insurance plans in 1998, compared with 58.5% in 2011, the most recent year of data available. Most of this increase comes from companies with more than 1,000 employees, the EBRI report explains. Among people working at firms with less than 50 employees, the percentage enrolled in self-insurance plans remains low, hovering around 12% for the past many years.

Despite the upward trend, it’s hard to say whether health reform has been a driving factor, since the rate has been increasing since long before 2010. The increase has been generating some concern, Mr. Pear writes. Smaller and mid-size companies – particularly those with young and healthy employees – have been showing more interest in self-insuring since the health law was passed. While the company-level insurance can protect employers from huge claims, these insurers can limit their payout for employees with certain preexisting conditions, such as HIV/AIDS, cancer, diabetes, and heart disease. In fact, analysts have noticed these insurers making a special effort to market their coverage to employers of the young and relatively healthy and refusing to cover companies that employ people with riskier health conditions, a practice that many consider unfair.

Another worry is that companies with young and healthy workers may be more likely to choose to self-insure than other firms. By taking the least risky enrollees out of the equation, this could increase the risk – and therefore, premiums – for everyone else.

Finally, if employees at a self-insuring company do end up with a costly illness or condition, the company always has the option of turning to the outside insurance market. The health law generally prevents insurers from turning down applicants based on their medical history, which further cuts down on the risk for companies that want to try self-insuring; their employees are unlikely to go untreated.

Readers, does your employer self-insure? If so, how do you believe it’s affected your experience of the health law – has it blunted the costs of coverage or kept you from accessing benefits you consider important, or both?

On Wednesday, California took two big steps toward getting its online health insurance exchange up and running. First, the website for the exchange, officially named Covered California, was officially launched. As we mentioned in a blog post last summer, GetInsured is part of the team of companies working to develop Covered California; as a subcontractor to Accenture, we are providing the software to run the online exchange.

The exchange website (www.coveredca.com) offers basic information and lists of frequently asked questions for individuals, families, and small businesses on the goals of the exchange and how it will work once plans become available in October. It also includes a glossary of health insurance terms, an introduction to health insurance, and a cost calculator to help customers figure out what their premiums will be for various plan levels and how much federal assistance they may qualify for, based on income and household composition.

California officials’ second announcement was that they have standardized the benefits, coverage levels, and pricing structures associated with each of the four levels of plans that will be sold: platinum, which will have the highest premiums and cover about 90% of an enrollee’s medical expenses; gold, which will cover about 80%; silver, which will cover about 70%; and bronze, which will cover about 60%. Bronze-level plans are intended to provide catastrophic coverage. All four levels will have an annual out-of-pocket maximum.

According to an article by Jeremy B. White of the Sacramento Bee, premiums for those receiving federal subsidies to use toward obtaining health insurance will range from $26 to $78 for the lowest income group, to $260 to $491 for people earning more. They could be even higher for people who don’t qualify for federal assistance. Exchange planners project that about 2.6 million Californians will be eligible for a subsidy, and that an additional 2.7 million who don’t qualify will still enroll in coverage through the exchange. According to an article by Chad Terhune of the Los Angeles Times, families earning up to $93,000 per year will be able to receive at least some help paying their premiums.

Co-payments will vary by income as well, write Judy Lin in a piece for the Associated Press and Daniel Weintraub in an article for California Health Report. Individual market consumers earning between $11,490 and $17,235 per year would pay $4 for an ordinary primary care appointment or a generic prescription, $6 to visit a specialist, and $8 for urgent care. Those in the next income bracket, earning between $17,435 and $22,980 per year, would pay $20 for a primary care visit.

While limiting the flexibility of plan pricing structures and benefits does cut down on consumer choice, it’s likely to make the shopping and enrolling process simpler and catch fewer consumers by surprise when a bill arrives. As Covered California Executive Director Peter Lee said to reporters, “For the first time, all Californians will be able to make an apples-to-apples comparison of their health plan choices in 2014.” Readers, how do you feel about this goal?